For quite some time now, there has been significant debate as to how blockchain technology can impact the banking sector. It has become apparent financial institutions have zero interest in embracing the open blockchain standard. Private and permissioned solutions, also known as distributed ledger technology, are their primary point of focus right now.
Corporate Finance Is Prone To DLT Disruption
It is rather apparent the financial sector will undergo some technological changes sooner or later. Mainly corporate banking will see a lot of benefits from using distributed ledger technology. When the paper-based traditional trade finance is replaced by a digitized and real-time version, exciting things are bound to happen.
No longer would users have to deal with documentary fraud, limited transactions visibility, or even extended reconciliation durations. Everything can be settled in real-time through a transparent environment which automates the majority of processes. Distributed ledger technology could finally nudge the financial sector into digitizing the whole ordeal.
Cross-border payments are often talked to in regards to Bitcoin and its open blockchain. But financial experts feel corporate banking and private blockchains can make a significant impact as well. With no intermediaries requires, the transaction costs can be lowered, and liquidity will be improved.
Identification and regulation are two pressing matters which continue to pop up in the world of distributed ledger technology. Centralizing digital identity information in a standardized format Although centralization should be avoided at all costs; distributed ledger technology allows for this process to happen due to its permissioned status.
For now, distributed ledger technology for corporate finance remains in the testing stages. No projects have come to fruition yet, albeit there have been some successful trials. Use cases will need to mature, and that process can’t be rushed by any means.
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